Have you always had interest in starting up a restaurant business? Have you gathered all the information needed to kick start your business? Are you a good chef looking for ways to share your recipes? If any of these describe you, this article is meant for you. We'll uncover the costs associated with opening a McDonald's franchise, which might be a business endeavor that's right for you. Let us dig deeper and find out more.
What Is a McDonald's Franchise?
A McDonald's franchise is a business authorized to carry out specialized commercial activities in its name. McDonald's uses a franchising model to grow its business worldwide. This allows individuals and groups to be a part of its international success and gain profit thereof.
Average Cost of Opening a McDonald's Franchise
To open a McDonald's franchise, you need at least $500,000 cash. You also incur an upfront cost of $45,000 as a franchise fee. You must invest roughly between $960,000 and $2,200,000 for a new business. You invest $1,000,000 to $5,000,000 for an existing business.
Cost Breakdown of Opening a McDonald's Franchise
To open a new restaurant, you need to have a down payment of 40% of the investment required in debt-free cash. Construction of new premises, signage, and landscaping costs are borne by the franchise. Interior design, equipment & supplies, and training costs are also on you. Based on the investment cost mentioned, you need an average of $632,000 as a down payment.
You incur a down payment of 25% of the investment required if you intend to buy an existing restaurant. This cash should be credit-free. Based on the investment cost mentioned, you need an average of $750,000 as a down payment.
Factors Affecting the Cost of Opening a McDonald's Franchise
You can either buy an existing restaurant or set up a new restaurant in a franchise agreement with McDonald's. In this case, we will look at both scenarios.
For an existing restaurant, the costs incurred depend on
- the sales volume of the restaurant
- the profitability of the entity
- the level of competition from similar players in the location of the restaurant
When it comes to a new restaurant, the costs incurred depend on
- the location of the restaurant
- construction of the restaurant itself
- signage
- training for new and existing employees
- legal and compliance
- costs for equipment and supplies
Extra Costs Associated with Opening a McDonald's Franchise.
The franchisee pays 4% of monthly sales as a service fee. A monthly base rent is also due, which is a percentage of monthly sales. There are also other miscellaneous costs that should be kept in consideration when opening a McDonald's franchise.
Conclusion
Though the initial outlay is high, credit facilities can help you to meet the 60% and 75% financing. McDonald's is a famous brand that assists franchisees in achieving success. Follow their training advice, and you will smile all the way to the bank.
